Editorial: What’s next for flood insurance?

Published: Wednesday, March 26, 2014 at 04:17 PM.

Congress earlier this month found uncommon bipartisan agreement on a bill that put off some of the worst parts of a 2012 law that sought to reform the National Flood Insurance Program.

And President Obama signed the more recent bill into law.

That means we can all breathe a sigh of relief that coastal home and business owners — here and across the nation — won’t immediately face the astronomical flood insurance price increases that seemed imminent.

And it should allow current and future policyholders to benefit from grandfathering, which will keep their policies affordable for the time being.

Less clear is what the long-term outlook is for the program and the many Americans who depend on it to protect their most valuable investments.

The flood insurance program exists so the people who live in coastal areas or other low-lying areas aren’t thrown into economic turmoil in the event of natural disaster. That goal remains a valuable national interest.

The problem is that the insurance rates are heavily subsidized and have little relationship to the risks faced by policyholders in various locations. The program, too, faces some uncertainty because it is $24 billion in debt, thanks largely to losses caused by Hurricane Katrina and Superstorm Sandy.

Congress earlier this month found uncommon bipartisan agreement on a bill that put off some of the worst parts of a 2012 law that sought to reform the National Flood Insurance Program.

And President Obama signed the more recent bill into law.

That means we can all breathe a sigh of relief that coastal home and business owners — here and across the nation — won’t immediately face the astronomical flood insurance price increases that seemed imminent.

And it should allow current and future policyholders to benefit from grandfathering, which will keep their policies affordable for the time being.

Less clear is what the long-term outlook is for the program and the many Americans who depend on it to protect their most valuable investments.

The flood insurance program exists so the people who live in coastal areas or other low-lying areas aren’t thrown into economic turmoil in the event of natural disaster. That goal remains a valuable national interest.

The problem is that the insurance rates are heavily subsidized and have little relationship to the risks faced by policyholders in various locations. The program, too, faces some uncertainty because it is $24 billion in debt, thanks largely to losses caused by Hurricane Katrina and Superstorm Sandy.

The 2012 “reforms” may not have been the right approach, but what is? There have to be changes to make the program more stable for the long run while keeping insurance affordable and not interfering with the ability to buy and sell real estate in flood-prone regions.

One issue that remains relevant is deciding how to assess the various levels of risk each area faces.

Under the 2012 law, flood control structures were only recognized if they met strict new federal standards imposed after Katrina. And FEMA is in the process of updating its flood maps, a process that has been fraught with disputes from local officials who have cited inaccuracies in the new elevations. If flood rates are to change based on the new maps, every reasonable effort should be made to make sure they are accurate.

The program could take in more money by cracking down on home and business owners required by their mortgage companies to carry flood insurance but who fail to do so. FEMA could also reduce its overhead by restructuring the generous fees it pays insurance companies to sign up flood policies.

We should be glad that the potential disaster that could have come about with the new rules was averted. However, the challenges that faced us before remain.

We cannot let our guard down, and our representatives in Washington should lead the way in writing common sense, forward-minded reforms that will protect the strength of the program without leaving coastal residents and businesses out of it.

This editorial first appeared in the Jacksonville Daily News, a Halifax Media Group newspaper.